Start with the idea that we should have a public health-insurance option available only through government-run “health insurance exchanges,” a central idea in the House Democrats’ health-care bill.
Follow it backwards. One place the path leads is the 2004 presidential election campaign.
Sen. John Kerry supported a version of the exchange. It was, and is, a hard idea to understand. And it has no resonance with things that go on in everyday life. Now the exchange was inspired by the way that federal government workers pick their health-insurance plan. (Except that the public option had not yet had the rouge applied that transformed national health insurance to an option in a government-run exchange.) The arrangement for government workers lead to a line that everyday folks could understand. Some of the people who get their health insurance through the federal government are members of Congress. The Kerry campaign line became, “I want you to have the same health insurance as members of Congress get.” That must have resonated because it was used time and time again to explain the Kerry plan.
So what do members of Congress get in the House bill? They get Section 330, “Enrollment in public health insurance option by Members of Congress.” That section says, in remarkable brevity compared to some other sections of the bill, “Notwithstanding any other provision of this Act, Members of Congress may enroll in the public health insurance option.”
Two words are most important: “notwithstanding” and “may.” There needs to be a “notwithstanding” because the general rule in the House bill is that people whose employers offer health insurance do not get to sign up for the options available through the exchange, including the public option. The architects of the House bill know that the cost would go through the roof if employers with medium- and low-wage employees could tell them to get subsidized coverage through the exchange.
“May” means members of Congress could sign up for the public option. But why would they? They wouldn’t if they were economically rational, and if any ever did, you would know he or she was in it for the headline, not to get the cheapest coverage. Members of Congress have a $177,000 salary this year. People with that level of income will not get any subsidy if they buy health insurance through the exchange, public or any other option. If they get their health insurance through the federal-employee plan, they pay an amount that is, on average, 28 percent of what the health plan costs. Pay 100 percent of the plan cost or 28 percent? The choice, for someone who is economically rational, would be clear. Members of Congress may be allowed to sign up for the public option, but they won’t.
— Hanns Kuttner is a visiting fellow at Hudson Institute.